Whether you need more working capital for expanding your business or for making it through a rough period, getting small business loans can be your best bet. It’s not always easy to secure loans and there are a lot of do’s and don’ts that you will want to know about before you talk to a lender.
Do Look Organized and Responsible
This means making sure you have all of the necessary paperwork about your financials before going into the meeting. Make sure to go over your own books first. Knowing before you go in how much your collateral items are worth will make you look better prepared.
Do go through your accounts. If your accounts receivable are old it will show up as a lending risk to many financial intuitions. They will want to make sure that any business loans extended to you can have regular payments made on time, and if your customers don’t pay you then you can’t pay your bills.
Also before applying for a small business loan, you should pay down your credit card balances as low as possible this will lower your utilization levels therefor your credit scores will go up. Utilization levels make up more than 30% of a personal overall credit score. So the lower your balances the better your score will be when applying for a business loan.
Check your small business score before you meet with lenders, they use this score to help evaluate your loan. You can get the score at bQual.com.
Don’t try to hide anything when applying to a small business lender.
Some of the biggest don’ts in applying for loans is not to disclose everything up front. Don’t hide anything because small business lenders always find something that one could be hiding in their due-diligence or underwriting phase. It is good practice to just be honest up front, and explain any potential negative things to the lender early on in the application process.
Small business loans can be a great help to your company and be used for many different things. But if you do not go through the loan process the right way, then you are likely to be declined. Being organized and responsible is very important and can help you avoid asking for too much.